Liquid Asset

AAA

DEFINITION of 'Liquid Asset'

An asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally regarded in the same light as cash because their prices are relatively stable when they are sold on the open market.

INVESTOPEDIA EXPLAINS 'Liquid Asset'

For an asset to be liquid it needs an established market with enough participants to absorb the selling without materially impacting the price of the asset. There also needs to be a relative ease in the transfer of ownership and the movement of the asset. Liquid assets include most stocks, money market instruments and government bonds. The foreign exchange market is deemed to be the most liquid market in the world because trillions of dollars exchange hands each day, making it impossible for any one individual to influence the exchange rate.

RELATED TERMS
  1. Money On The Sidelines

    The cash that is held either in savings or in low-risk, low-yield ...
  2. Cash

    Legal tender or coins that can be used in exchange goods, debt, ...
  3. Net Liquid Assets

    A measure that examines a company's net liquid financial assets. ...
  4. Liquidity Risk

    The risk stemming from the lack of marketability of an investment ...
  5. Illiquid

    The state of a security or other asset that cannot easily be ...
  6. Asset

    1. A resource with economic value that an individual, corporation ...
RELATED FAQS
  1. Why should an investor consider the financial services sector?

    Any serious investor should consider the financial services sector because it offers one of the largest markets that is full ... Read Full Answer >>
  2. What investments have been the poorest historical performers?

    Financial investments that offer low potential gains are technically the worst for investors. These investments are usually ... Read Full Answer >>
  3. Can investments be consumed immediately?

    Consumption refers to the value of a good or service that has been bought. This value is meaningful to the individual who ... Read Full Answer >>
  4. How do I measure option liquidity?

    An option is a financial instrument that gives the holder the right to purchase shares in a company at a certain set price ... Read Full Answer >>
  5. What is a liquidity squeeze?

    A liquidity squeeze occurs when a financial event sparks concerns among financial institutions (such as banks) regarding ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Understanding Financial Liquidity

    Understanding how this measure works in the market can help keep your finances afloat.
  2. Mutual Funds & ETFs

    ETF Liquidity: Why It Matters

    Lower levels of liquidity in exchange-traded funds make it harder to trade them profitably.
  3. Taxes

    Designating A Minor As An IRA Beneficiary

    Leaving liquid assets like cash or securities to minors can be a complicated procedure. Make sure you understand how your gift will be distributed, managed and taxed.
  4. Stock Analysis

    What Could Be The Outcome For Opko Health?

    Investors have pinned high hopes on Opko Health , a development-stage healthcare company spearheaded by billionaire healthcare entrepreneur Phillip Frost.
  5. Stock Analysis

    How Will Chesapeake Energy Create Value?

    A few years ago, Chesapeake Energy's bloated balance sheet forced it to sell off assets at fire-sale prices and fund its aggressive capital spending plan.
  6. Stock Analysis

    Why Is SolarCity A Growing Stock?

    SolarCity's stock may be down about 40% in the last 12 months, but its underlying business is growing rapidly.
  7. Stock Analysis

    What Drugs Could Boost Biogen Idec’s Sales?

    Bet against biotechnology giant Biogen Idec and it's likely to sting -- at least that has been the message over the last couple of years.
  8. Stock Analysis

    What's DISH’s Strategic Direction In The Industry?

    Telecommunications industry has evolved from being a backwater of ultra-conservative utility-like stocks to a high-growth area for cutting-edge investors.
  9. Budgeting

    Choosing To Rent Or Buy in New York City

    Yes, it's good to compare values in the rental and home buying markets in the Big Apple, but be aware that personal factors are often the deciding ones.
  10. Stock Analysis

    Did J.C. Penney’s Turnaround Plan Work Out?

    J.C. Penney has wrapped up another year of its turnaround plan: ultimately, to make money in a stock, the underlying business has to make money, too.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center